The appellant companies entered into a tax planning scheme during 2004. The scheme was designed to allow employees and officers of the companies to be given bonuses which would not attract income tax or National Insurance contributions (NICs) deductions. This was to be achieved by awarding the employees shares in specially formed subsidiaries of the companies rather than in cash. The subsidiaries were subsequently liquidated, and their assets were distributed to the employees.
The scheme sought to take advantage of ITEPA 2003, Pt 7. In broad terms, no income tax liability generally arises in respect of the acquisition of an employment-related security that is a restricted security (or a restricted interest in securities) (Pt 7, Ch 2). Furthermore, the liquidation of the company was not a ‘chargeable event’ for employment-related securities purposes.
The First-tier Tribunal ([2013] UKFTT 387 (TC))
